Why Pacsun is Outsourcing Omnichannel Fulfillment
Pacsun is riding the wave of the fast-growing third-party logistics (3PL) market. The lifestyle apparel retailer is putting Cart.com in charge of its lone fulfillment center and chasing the benefits of outsourcing.
Pacsun aims to gain from Cart.com’s logistics expertise and order and inventory management capabilities to support nationwide fulfillment.
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The more than 320-store retailer will hand over the management of its 2 million-square-foot Groveport, Ohio fulfillment facility to the 3PL. The warehouse marks the 14th omnichannel fulfillment center in Cart.com’s nationwide network, which now encompasses nearly 8 million square feet. The automated facility includes advanced sortation capabilities and more than 25 miles of conveyance.
The transition comes a month after Cart.com clinched a similar deal managing operations at JP Outfitters’ fulfillment facility near Cincinnati.
“We are pleased to partner with Cart.com and believe their scale, proprietary technologies and operational expertise will enhance our efficiency and increase customer satisfaction,” said Russell Bowers, chief operating officer and chief financial officer of Pacsun in a statement.
The location will fulfill online orders and ship to the company’s store network, according to Remington Tonar, co-founder and chief growth officer at Cart.com.
“They do all their store replenishment through there as well, and we have a lot of facilities that do both for customers,” Tonar told Sourcing Journal. “Our focus is very omnichannel, so we’re always looking for facilities that can support omnichannel fulfillment and distribution, and our software is built to do that as well. Through our software, all of our facilities are enabled to fulfill and track inventory orders across those channels.”
Most of the 14 facilities Cart.com operates serve multiple customers, ranging from three to 15 depending on the size of the facility.
According to Tonar, the Pacsun facility will also be converted to a multi-customer warehouse down the line.
“During Covid, there were a lot of folks—Amazon included—that kind of overbuilt. They might have too much space on their hands in the post-Covid environment,” said Tonar. “We can maximize the value of that space more readily than a private company or individual brand, can given that all of our facilities are multi-tenant.”
Pacsun’s warehouse transition comes as logistics costs continue rising. Business logistics costs hit $2.3 trillion in 2022, growing 19.6 percent year-over-year over 2021 totals, according to the State of Logistics Report from the Council of Supply Chain Management Professionals (CSCMP) and Kearney. This marked the highest cost growth over the past decade.
Inventory carrying costs, including storage, were 52 percent higher at $759.3 billion, illustrating the drawbacks in operating a fully owned network.
Beyond keeping costs down, Cart.com believes clients choose to work with 3PLs because they easily integrate multiple software platforms—a tall task for most retailers.
“As retailers have to take orders from and ship product to or through more channels, it becomes more complex,” Tonar said. “And a lot of merchants just decided that they don’t have to contend with that complexity.”
Pacsun warehouse employees will keep their jobs, with Cart.com retaining all site supervisors and managers.
“Acquiring that talent is also part of why we do these deals,” said Tonar. “We’re really excited to absorb the employees at that facility and leverage their knowledge to make our entire network better and cross pollinate that knowledge into other fulfillment centers as well.”
Cart.com has worked on meshing e-commerce software with a robust fulfillment and contract logistics network that helps merchants to sell and fulfill across channels, whether it be Amazon, Etsy, Walmart or others, supporting 6,000 brands and hosting $8 billion in total gross merchandise value (GMV) across its fulfillment ecosystem.
Cart.com’s fulfillment services are powered by proprietary software as well as predictive analytics, which Pacsun can use to reduce increasing logistics costs and gain real-time inventory visibility insights.
Cart.com was founded in November 2020, has raised over $440 million and had a valuation of $1.26 billion after the company’s Series C funding round in June.
For Pacsun, the partnership comes as the Gen Z-leaning retailer beefs up its omnichannel customer experiences, recently implementing Manhattan Active Point of Sale from Manhattan Associates. By expanding its solution set to include the POS solution, Pacsun intends to give associates a streamlined, intuitive experience across all in-store selling, engagement and fulfillment functions.
